MOSCOW—Russia and China have opened a currency-swap line, paving the way for further trade and investment between the neighboring countries, Russia’s central bank said on Monday.

Russia has stepped up efforts in recent months to develop closer ties with China after relations with the West deteriorated over the situation in Ukraine. Western sanctions, aimed at punishing Russia for the annexation of Crimea and its support of anti-Kiev rebels in eastern Ukraine, have effectively removed it from the global borrowing markets. The new foreign-exchange swap facility is designed to improve liquidity in Russia’s financial sector and beef up stability.

The Bank of Russia and the People’s Bank of China agreed to open a yuan-ruble swap line worth 150 billion yuan ($24.47 billion or 984 billion rubles) for three years. This will offer both countries access to each other’s currencies without the need to purchase them on the currency markets, Russia’s central bank said.

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The announcement follows a meeting between Russian Prime Minister
Dmitry Medvedev
and his Chinese counterpart,
Li Keqiang,
in which they talked over future steps regarding cooperation in the financial and energy fields.

“The agreement on swaps in national currencies of the Bank of Russia and the National Bank of China will contribute to [the] development of two-party relations thanks to wider capabilities of financing trade and direct investments, as well as due to a more common use of Russia’s ruble and China’s yuan in the international trade and investment activity,” Russia’s central bank said in a statement.

Russian officials have repeatedly called for an increase in yuan-ruble transactions with China—Moscow’s second largest trade partner—in an attempt to lower the country’s dependence on the U.S. dollar.

The finance ministry said last month it was considering diversifying its debt portfolio away from countries that have imposed sanctions on Moscow and into the papers of Brazil, China, India, and South Africa, a bloc known as Brics.